Alaska Governer Shocks Oil Industry with Tax Change
rigzone.com
Greenwire - Friday, January 14, 2005
Oil producers in Prudhoe Bay, Alaska, could pay more than $120 million in additional oil taxes, under an oil field classification adjustment announced by Gov. Frank Murkowski this week in his annual State of the State address.
Murkowski said oil from satellite fields no longer would be taxed at lower rates under the Economic Limit Factor section of the state's tax code, which is designed to lower costs on newly developed or declining fields. Under Murkowski's plan, the entire Prudhoe Bay area, including satellite fields, would be taxed at the same rate of 15 percent, less pipeline and tanker costs, effective Feb. 1.
The announcement drew immediate fire from the state's energy sector, which was told of the tax changes a short time before Murkowski delivered the speech.
"I'm astounded. I can't believe this governor would be doing this," said Larry Houle of the Alaska Support Industry Alliance. "This is bound to send some shock waves through the industry."
"The proposed action brings into question whether it would be possible for the state to ensure the predictability and durability necessary for such a huge project as the Alaska gas pipeline," Exxon Mobil Corp. said in a statement released after the speech.
But Murkowski also offered new incentives and programs for the energy sector in his speech, including considering funding natural gas exploration in the Cook Inlet, looking into buying a portion of the Alaska pipeline and planning for the natural gas pipeline. "I would ask the Legislature to evaluate whether the state should pay a portion of the mobilization and demobilization costs to bring a jack up drilling rig to Cook Inlet to get exploration moving again," Murkowski said. "We also need to explore in the Kenai National Wildlife Refuge where the Swanson River field continues production. We also must work with the Interior Department to ensure that the Swanson River field be available for summer gas storage." He added, "We are asserting Alaska's right to enter Glacier Bay, to select state land along oil pipeline right-of-way corridor, and to traverse historic RS2477 trails that provide traditional access across federal land" (Cockerham/Persily, Anchorage Daily News, Jan. 13).
To save natural gas for the state's manufacturing sector, Murkowski said the state could work to reopen the Healy Clean Coal Plant, which has not been operational except for a test run several years ago, as a source of electricity for the state's populous south-central region (Daniel Rice, Fairbanks Daily News-Miner, Jan. 13). |
